Kenya's defining year


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Politicians, pundits, and (sometimes) development practitioners have been arguing that 2012 will be a make-or-break year in Kenya’s history, similar to 1963 or 1992. Is the 2012 challenge real or just a case of pundits playing Cassandra? Specifically there are three challenges coming together.

First are national elections. The last general elections ended in a catastrophe. If the 2012 elections are again violent, Kenya’s image as a peaceful, mature democracy may be tarnished for a generation. Investors and tourists would be even more reluctant to come to Kenya and quick to dismiss the “friends of Kenya” (including your blogger) who strongly believe in the strengths of this country and its medium-term potential. In news headlines, Kenya would join the ranks of other unstable African countries, and drift away from emerging economies such as India and Indonesia.

Second is implementation of the Constitution. Even though all eyes are on the presidential race, elections will be held simultaneously for parliament and the brand-new forty-seven counties governors and assemblies. This will not only make it the most challenging logistical effort in Kenya’s electoral history but also establish a new system of devolved government an alter Kenya's structure as a country. Kenyans bring to this process tremendous enthusiasm and energy, but the devil lies in the detail. The specific design of fiscal architecture, accountability systems and the management of this massive transition will determine whether Kenya can weather the economic storm in a way that enhances social equity, service delivery, citizen engagement, and so deliver the promise of institutional transformation.

Third is the next global economic crisis. It is clear that the world economy will be in turmoil in 2012.The only uncertainty is about the extent of the crisis. Europe’s inability to solve its debt problems is directly affecting economic prospects in developing countries.Flowers and vacations are luxury goods, which Europeans are likely to sacrifice as their income drops. Unfortunately for Kenya, these are among the main sources of foreign exchange. During 2008/09, Kenya was able to weather the global financial crisis by using fiscal and monetary stimuli. But today, Kenya’s economy is in a weaker position and fiscal buffers need to be rebuilt before they can be used again. Also, these economic challenges come at a time when more resources are needed, including for decentralization and the war in Somalia.

These are the key reasons why 2012 could go wrong. But Kenya’s policy makers can rise to the challenge and engineer a turn-around. In defining years, countries can re-invent themselves. In 1990, Germany took the opportunity of reunification swiftly. In 1994, South Africa delivered surprisingly free, fair and stable elections ending Apartheid. In 1999, after the fall of long-time dictator Suharto,Indonesia introduced democracy and sweeping devolution. All three countries made big mistakes in these crucial years, especially in economic policy, which are still being felt today. But at the same time, all three countries adopted more stable, democratic and flexible institutions, which have paid-off in the medium-term and helped them during the recent economic challenges. Some countries even managed to turn-around after war and crisis, including the Asian success stories of South Korea and Vietnam. In Africa more recently Mozambique, Uganda and Rwanda all have experienced political stability and economic recovery after destruction.

Kenya is at a similar turning point in its history. There is a direct relationship between the 2007/08 post-election violence and the adoption of the new Constitution, with its radical provisions for improved governance and devolution. 2012 will be the first big test of whether the “New Kenya” can deliver free, fair and peaceful elections as part of a new institutional structure and at the same time provide continued growth during a global economic crisis. Let us hope that Kenya’s politicians keep these challenges and opportunities in mind as they finalize their wishes and resolutions for the New Year.


Wolfgang Fengler

Lead Economist in Trade and Competitiveness

Join the Conversation

Rebecca Lutte
January 06, 2012

Another critical component is transportation. A strong aviation system is vital for sustainable growth in aid, trade, and tourism. With the current battle between low cost carriers and established carriers in Kenya - all battling for the same market share, this could also be a big year for new entrants and the loss of some smaller airlines.

January 04, 2012

Dear Shantha,

To this I would add: ICC rulings ... drought preparedness ... evolution of Somalia situation ... addressing growing rich/poor divide ... rapid urbanization and vulnerability of urban poor ... but then perhaps your blog would become a book ...!

Best regards.

January 10, 2012

1. I guess through IFC the WB can help Kenya build a fertilizer company. All the raw materials are available locally. companies like Kel chemicals may be good companies to build on this.

2. Encouraging farmers in Western province to embrace sugar cane farming, cotton farming, tobacco farming.

3. Using Jua Kali labor to paint trains, mend passenger seat cushions, welding work on trains. Use of casual labor t o collect garbage, clean rivers.

4. repair City center Eastleigh road.

5. set apart land in all counties for industrial parks

6. have more than one county service branches, for the same function. ie it will be more difficult for the people in Gatanga to go to Muranga town for services passing thika where they got the services previously.

Rachel Kasumba
January 30, 2012

Shanta/Wolfgang, indeed a lot of people across the world are eagerly awaiting the outcome of this year’s elections and new constitution adoption in Kenya.

The citizens of the country certainly look forward to a brighter future especially due to the East African Community integration progress that has ushered in an expanded market base for the region’s greatest economy and investors from outside the region are also coming in large numbers as a result.

February 21, 2012

In this election year, we will hear of so many promises, of things the presidential candidates are willing to do for you to make you be most prosperous and to achieve whatever goals you have in your life. We have even heard the candidates say the major shakeups they would do in their first 100 days of government. I would like to run for president of the Republic of Kenya and here is my campaign, my vision and my goals for Kenya.

I only have five goals which I believe would spur economic growth in Kenya:


FOOD IS DAMN EXPENSIVE PERIOD. As president my number one priority would be lowering the costs of food. I would do that by lowering taxes on food implements & equipment. Lower taxes on things like farm equipment, the seedlings, fertilizer etc. Give subsidies to farmers and make sure there is price stability and if that means that my government should buy the food in times of plenty and sell in times when food supply is low, then there I will be.


The other thing is educating Kenyans in the arid and semi-arid areas how to do irrigation, my government will be on the forefront of investing in irrigation equipment and getting the necessary manpower to make sure that irrigation is available to all areas of the country and this way we can avoid the periodic droughts that Kenya faces.


i) ROADS: The U.S embarked on country wide road systems in the 1950s and that made travel and communication that much easier. It opened up towns and cities to more business opportunities due to the road network. As your president, it will be my number one priority to have greater connectivity between towns and cities and villages. Mombasa to Kisumu should be very well connected and inter connected such that to move goods and services from all corners of the country would be way cheaper due to less wear and tear on vehicles, less time consumed moving these goods therefore less expenses making for cheaper goods, cheaper goods make for competitive prices.

ii) ENERGY & POWER: The energy costs of Kenya are just too damn high, very inefficient (we all know of this KPLC nkt!) There is a need for Kenya to look for ways to improve on our energy production. With the much sunshine that we have solar power should be harnessed and enhanced, Wind Energy should be used, if we need to buy more power from our neighbouring countries so be it, for the constant power blackouts are definately no good for business, as they lead to wastage of resources, time and money. To encourage the growth of industries in manufacturing where mmost of our youth would be employed, we need to make sure that they are faced with lower electricity bills which should make their goods competitive in the East Africa region.


I) Mombasa and greater Coastal Region: Its the country’s number one tourist destination and yet the governments have grossly neglected to take care of this region. There is a heavy need for investment in the city, road networks, social services to make sure that things like maintenance of the streets and infrastructure is highly improved.

The port of Mombasa is very congested, very inefficient, too many delays too much corruption. Kenyans do not treat the port with the importance it deserves. Most goods that go through Mombasa serve not only Kenya but also Uganda, Rwanda Burundi, Congo. Huge markets for Kenyan industries and yet the port is ignored. It needs to be decongested, made more efficient, expanded, and reduce the bureaucracy that delays the fast movement of goods.

II) KISUMU and greater western Kenya: Kisumu is the most central city in the EAC and accessible to all E.A.C countries. Its time it was given much more attention by the government. My presidency would focus on marketing the city/region. Improving the fish industry would also be important as it is a great employer of the region. There is no reason why Kisumu fish should not be the best in the region. Greater fishing technics, greater maintenance of the Lake to make sure that its ecosystem is protected would be my goal.


Unless there is a sense of security people will not be feel free to go out and trade goods and services. Unless there is law that governs everyone, however big or small, people will be exploited and opportunities will disappear.

I) POLICE FORCE: They need to be properly trained, and properly equiped to handle the security issues that Kenyan society faces. The police are also poorly paid and therefore low morale and therefore no ‘utumishi kwa wote’ The other day government websites were hacked, I am not sure whether the police force we have is prepared to deal cyber crime, it still can not cope with ‘huyo mwizi’. I would propose a reduction/ redistribution of police force/freezing hiring of new recruits. The reduced force that would be better equipped and better trained should also be better compensated.

II) NATIONAL SECURITY: For a long time we have ignored our national borders. Its time the borders were taken seriously, the threats of Al Shabaab and other groups, are hitting closer home than we ever thought. Border security is paramount.

With these five goals, I strongly believe we can change our country to be a regional force, an economic power, a country full of opportunities a country of HOPE!